India and the European Union (EU) resumed negotiations for a Free Trade Agreement (FTA) on Monday, with both sides determined to finalize the deal by the end of the year. The high-level talks began amid growing concerns over US tariff threats under former President Donald Trump’s trade policies, prompting India to strengthen its economic ties with the EU, one of its largest trading partners.
Both parties entered the 10th round of discussions with key issues still unresolved, but new developments could accelerate progress. India’s latest budget reinforced its position on import duties, signaling a strategic shift in trade policy. Meanwhile, the EU has shown flexibility on contentious matters such as carbon tax, raising hopes for a breakthrough. Experts believe that the changing global trade landscape, shaped by tariff uncertainties from the US, may push India and the EU toward a mutually beneficial agreement.
The EU remains a crucial market for India, with bilateral goods trade reaching $190 billion. India has been seeking greater access for its agricultural products, textiles, and services, while the EU has pushed for reduced tariffs on automobiles, wines, and dairy products. Disagreements over data protection regulations and labor standards have also slowed negotiations in previous rounds, but negotiators on both sides are now under pressure to make concessions and move forward.
India has expressed concerns about the EU’s Carbon Border Adjustment Mechanism (CBAM), which imposes levies on imports based on their carbon footprint. However, recent discussions indicate that the EU may soften its stance, offering India a transition period to adjust. This shift could remove a major hurdle in the negotiations and pave the way for a broader consensus on environmental and trade policies.
As the trade talks progress, India remains cautious about balancing its manufacturing interests while accommodating EU demands. The government has prioritized domestic production through initiatives such as “Make in India,” leading to hesitancy in reducing import duties on sensitive sectors. The EU, on the other hand, views the FTA as a way to secure stable supply chains and diversify its economic partnerships amid geopolitical uncertainties.
The Trump administration’s earlier tariff measures had already prompted India to seek alternative markets, and the possibility of renewed protectionist policies in the US has only reinforced this approach. Indian officials have emphasized the need for a diversified trade strategy that reduces dependence on any single partner, making a strong trade agreement with the EU even more essential.
The upcoming rounds of negotiations will test the political will on both sides to reach compromises. Experts suggest that India’s stance on intellectual property rights, particularly in the pharmaceutical sector, could become another sticking point. The EU has consistently pushed for stricter patent protections, while India has defended its position on affordable medicines and generic drug exports.
With the year-end deadline looming, trade negotiators are expected to intensify discussions in the coming months. While challenges remain, the evolving global trade environment may compel both sides to finalize a deal that strengthens economic ties and shields them from unpredictable shifts in US trade policies.
Indian negotiators have also focused on securing greater mobility for skilled professionals, a key demand in trade talks. The EU’s stringent visa regulations have posed a challenge for Indian IT and service sector workers seeking employment opportunities in Europe. Recent discussions indicate that India is pushing for more favorable work permit conditions to enhance labor mobility, which could benefit its technology and consulting industries.
Meanwhile, the EU has expressed concerns about regulatory hurdles faced by its businesses in India. European investors have long sought a more transparent and predictable business environment, citing issues related to taxation, licensing, and bureaucratic delays. India has responded by highlighting recent policy reforms aimed at improving ease of doing business, but the EU remains cautious, demanding stronger assurances.
Agriculture has emerged as another complex area in the negotiations. While India is seeking reduced tariffs and greater market access for its agricultural exports, including rice, spices, and marine products, the EU has raised concerns about sanitary and phytosanitary standards. European officials have insisted on stricter quality controls, which Indian exporters argue could create non-tariff barriers that limit their competitiveness in the European market.
As negotiations progress, geopolitical factors are also influencing the discussions. The Russia-Ukraine conflict and supply chain disruptions have reshaped global trade dynamics, prompting both India and the EU to rethink their economic partnerships. The EU is actively seeking reliable trade partners to diversify its supply chains, while India views the FTA as a crucial step toward expanding its presence in high-value European markets.
Despite these challenges, both sides have expressed optimism about reaching a mutually beneficial agreement. Recent ministerial-level discussions have signaled a willingness to compromise on certain contentious issues, suggesting that a final deal could be within reach if negotiators maintain momentum. With growing economic uncertainties worldwide, a strong India-EU FTA could provide much-needed stability and boost trade between the two regions.
